Correlation Between Coupang LLC and Sun Country

Can any of the company-specific risk be diversified away by investing in both Coupang LLC and Sun Country at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Coupang LLC and Sun Country into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coupang LLC and Sun Country Airlines, you can compare the effects of market volatilities on Coupang LLC and Sun Country and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Coupang LLC with a short position of Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coupang LLC and Sun Country.

Diversification Opportunities for Coupang LLC and Sun Country

-0.15

Correlation Coefficient

Coupang LLC  Sun Country

Good diversification

The 3 months correlation between Coupang and Sun is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Coupang LLC and Sun Country Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Country Airlines and Coupang LLC is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Coupang LLC are associated (or correlated) with Sun Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Country Airlines has no effect on the direction of Coupang LLC i.e., Coupang LLC and Sun Country go up and down completely randomly.

Pair Corralation between Coupang LLC and Sun Country

Given the investment horizon of 90 days Coupang LLC is expected to under-perform the Sun Country. But the stock apears to be less risky and, when comparing its historical volatility, Coupang LLC is 1.95 times less risky than Sun Country. The stock trades about -0.06 of its potential returns per unit of risk. The Sun Country Airlines is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,461  in Sun Country Airlines on September 17, 2024 and sell it today you would earn a total of  33.00  from holding Sun Country Airlines or generate 2.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Coupang LLC  vs.  Sun Country Airlines

Coupang LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coupang LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Coupang LLC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Sun Country Airlines

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Country Airlines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Sun Country showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coupang LLC and Sun Country

The main advantage of trading using opposite Coupang LLC and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coupang LLC position performs unexpectedly, Sun Country can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sun Country will offset losses from the drop in Sun Country's long position.

The idea behind Coupang LLC and Sun Country Airlines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.